Aadhaar must for ITR filing, new PAN from July 1: CBDT

The government today made it clear that the linking of the Aadhaar and the Permanent Account Number (PAN) will be a "must" for filing Income Tax Returns (ITRs) and obtaining PAN from July 1. The assertion comes a day after the Supreme Court upheld the validity of an I-T Act provision making Aadhaar mandatory for allotment of PAN cards and for ITR filing, but had put a partial stay on its implementation till a Constitution bench addressed the issue of right to privacy.

The Central Board of Direct Taxes (CBDT), policy-making body for the I-T department, said the apex court's order had only given a "partial relief" to those who do not have an Aadhaar or an Aadhaar enrolment ID, and the taxman, hence, "will not cancel" the PAN of such individuals.

The Board said it was issuing a three-point gist of the SC order and called it the "effect of the judgement" in order to clear any doubts in the minds of taxpayers. "From July 1, 2017 onwards, every person eligible to obtain Aadhaar must quote their Aadhaar number or their Aadhaar enrolment ID number for filing of ITRs as well as for applications for PAN.

"Everyone who has been allotted PAN as on the 1st day of July, 2017, and who has Aadhaar number or is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to income tax authorities for the purpose of linking PAN with Aadhaar," the CBDT said. It explained what will happen in a case of "non- compliance" or the instance where a person does not possess Aadhaar.

"Only a partial relief by the court (SC) has been given to those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being, that their PAN will not be cancelled so that other consequences under the Income Tax Act for failing to quote PAN may not arise," the CBDT said.

The CBDT quoted relevant portions of the SC order to endorse its stand of Aadhaar-PAN linking and said the apex court "in its landmark judgement has upheld Section 139AA of the Income Tax Act as constitutionally valid which required quoting of the Aadhaar number in applying for PAN as well as for filing of ITRs."

It added that the apex court has only granted a "partial stay for the time being, pending resolution of the other cases before the larger bench of the Supreme Court" to Section 139AA(2) which states that all those who have a PAN and are eligible to get Aadhaar, as on July 1, 2017, should intimate it to the I-T department else their PAN will be declared invalid.

The CBDT quoted the SC order in this context: "...those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number. This is the stipulation of sub-section (1) of Section 139AA, which we have already upheld.

"At the same time, as far as existing PAN holders are concerned, since the impugned provisions are yet to be considered on the touchstone of Article 21 of the Constitution, including on the debate around Right to Privacy and human dignity, etc. as limbs of Article 21, we are of the opinion that till the aforesaid aspect of Article 21 is decided by the Constitution Bench a partial stay of the aforesaid proviso is necessary," the Board said quoting the SC order.

A senior I-T official said the CBDT decided to announce the non-cancellation of PAN provision as such a situation will lead to a person not being able to do his or her normal banking and other financial operations. An another official said the apex court's order given yesterday was "studied" by a high-level team from the Prime Ministers Office, the Law Ministry, the Finance Ministry, the CBDT and the Income Tax Department after which the latest clarification has been issued.

The government, under the Finance Act 2017, has made it mandatory for taxpayers to quote Aadhaar or enrolment ID of Aadhaar application form for filing of income tax returns (ITR). Also, Aadhaar has been made mandatory for applying for PAN with effect from July 1, 2017.

The department, till now, has linked over 1.16 crore Aadhaar numbers with its PAN database. While Aadhaar is issued by the UIDAI to a resident of India, PAN is a ten-digit alphanumeric number allotted in the by the I-T Department to a person, firm or entity.